The dollar climbed against most of its major currency counterparts in early Tuesday session on traders’ expectations for an improved Consumer Confidence and House Prices due for publishing today. The dollar index rose on speculations that the Fed will scale back its record stimulus programme worth $85 billion per month if the economy continues to show signs of improvement. This morning the greenback peaked at 102.04 against the yen, while also rising against the euro and trading at 1.2902 at the time of writing.
The Consumer Confidence index, which will be published later today, is forecasted to rise to 71 points for May, and if economists’ anticipation turns out right, this will be its highest level since November. In comparison, the index’s result for April was 68.1 points.
The S&P/Case-Shiller Home Price index, a leading house measure of the 20 largest cities in the US, is also expected to show improvement with economists’ forecast being for a growth by 10.2%, YoY, in March, which will be its biggest climb since April 2006.
If actual data confirms preliminary estimates, the Fed will have an additional reason to reduce the asset-buying programme. This explains market makers’ renewed interest towards the dollar. Analysts say the US central bank is likely to take the necessary actions in the fourth quarter of the year. However, if the positive trend of recovery continues, scaling back the stimulus may occur earlier.
Technical analysis
USD/JPY
At yesterday’s session the dollar was in the range 100.70-101.25 JPY. This morning the pair was trading at 101.60-101.95.
If the greenback successfully overcomes the resistance zone at 101.90-102.10, its aim will be reaching and testing the zone at 102.40-102.55. If successful, the upward trend will continue to 102.80-103.05. If the dollar drops below the support at 101.75-101.45, the next support is expected to be at 101.30-101.05. In case of a breakdown, the downward trend will continue to 100.75-100.55.
Source: dfmarkets.co.uk
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